Taxes are Good

You can blame Brian: he got me going on the subject of taxes at the pub the other day.

I know I'm on dangerous ground here, what with daring to disagree with that trained (well in Calgary, anyway) economist Stephen "I believe that all taxes are bad" Harper and the more heavily-armed elements of the Tea Party, but the fact is, taxes are a very good thing indeed.

For starters, taxes are an efficient and cost-effective way of collectively providing us with goods and services we would find impossible or too expensive to pay for individually: streets and parks, sewers and bridges, schools and libraries and hospitals, fire departments and police forces, courts and prisons and armies, pensions and health care.

Anti-tax arguments tend to fall into three main categories. The first is that there is a lot of "fat" and "waste" in government. The annual reports by auditors general serve as a valuable check on government and do turn up examples of waste, but taken as a percentage of government spending, they seldom amount to even a fraction of one percent. Money wasted to be sure, but not an argument against taxation. Based on the last two years, a much better case could be made for doing away with the global financial industry. When it comes to pissing away money, government can't hold a candle to those guys.

Politicians love this one because they can square the circle with it: we can have tax cuts without cutting programs and services. All we have to do is eliminate "fat" and "waste". The fact that no government ever has, and that they all still regularly promise it, should tell you something.

The second anti-tax argument goes farther: all taxes are a waste of money because they drain money away from productive economic activities. This is probably what Harper meant. This argument seems to presuppose that government takes our tax dollars and simply has a big bonfire. In fact, government spending generates economic activity. Some tax money flows directly back to citizens in the form of old age pensions or wages. Their spending is, in turn, someone else's income. The rest is spent purchasing goods and services, which again, creates jobs.

The fact that the Conservatives quickly adopted this approach to deal with the recession and have subsequently spent many millions advertising the fact is proof of its effectiveness. At least we know jobs have been created in the media and in the ad agencies.

Ironically, the one form of government spending generally favoured by the right (and it is almost always the right who oppose taxation) is on the military. Here, in fact, the government does take some of our money and literally blows it up, producing no economic benefit.

The third anti-tax position is the most extreme: in its simplest form it believes government is unnecessary. It's my money. I made it on my own, so why should I pay taxes? This is the view that underlies such notions as "Tax Freedom Day". We stop "working for the government" and get to keep our money. Taxation is confiscation. It's as if the payments, goods, and services provided by government have no value. Those who hold this view tend to be angry at government.

They ignore that fact that businesses wouldn't exist without the transportation, water, and power infrastructure built and maintained with taxes, that workers would lack basic skills without education obtained in public schools, or that property is protected by police, fire services, and courts of law.

And here is a final argument for taxes: far from discouraging economic activity, taxes encourage it. Consider whether business flourishes best in lawless societies or in those where people and their intellectual and physical property are protected; where there is a modern, efficient infrastructure and educated labour force; and where a pleasant quality of life makes attracting top talent easier. There's a reason companies prefer to set up head office in Switzerland rather than Somalia, even though Somalia has very low (I'm guessing no) taxes.

So there you are: the problems I see with anti-tax arguments and the reasons I see in favour of fair, efficient, intelligent taxation and government spending (what that means would take a lot longer to explain).